scholarly journals Effects of Capital Market Development on the Economic Growth of Nigeria

2021 ◽  
Vol 7 (2) ◽  
pp. 30-46
Author(s):  
Udo Ginikachi Cynthia ◽  
Nwezeaku Nathaniel Chinedum ◽  
Kanu Success Ikechi
Keyword(s):  
Economic Growth ◽  
Capital Market ◽  
Unit Root Test ◽  
Secondary Data ◽  
Market Development ◽  
Index Number ◽  
Stock Market Development ◽  
Distributed Lag ◽  
Long Run ◽  
The Government

This study examines the effect of capital market development on the economic growth of Nigeria using data on Real Gross Domestic Product as a proxy for economic growth while capital market variables constitute the independent variables. This includes Market Capitalization, All Share Index, Number of Listed Securities and the number of listed companies The study adopted an expost-facto research design which utilized secondary data for the period 1983 -2016. While an Augmented Dickey-Fuller unit root test was used for preliminary analysis; an Autoregressive Distributed Lag (ARDL) was used for the model estimation. .A combination of ARDL bounds test for co-integration, ARDL short and long run error correction models were used for estimation. All the tests helped to confirm the integrity of our models. Findings of the study indicate that, the Number of listed Securities and All Share Index maintained a significant relationship with economic growth in Nigeria both in the short and long runs. Based on the findings of study it was recommended that government should help to remove all impediments to stock market development in the form of tax, legal and regulatory barriers as they act as disincentives to investments in the capital market. Again, government should help to maintain policy consistency in the pursuit of growth in the Nigerian capital market. By so doing, counter developmental policies should not be allowed to crowd out the gains of capital market development and by extension on economic growth in the long run. Lastly the government should find ways and means of boosting the confidence of investors to retain their portfolio investments.

scholarly journals Dynamic Impact of Trade Openness on the Economic Growth in Nigeria

2019 ◽  
Vol 8 (5C) ◽  
pp. 609-616
Keyword(s):  
Economic Growth ◽  
Trade Openness ◽  
Unit Root Test ◽  
Secondary Data ◽  
Dynamic Impact ◽  
Long Run ◽  
Short Run ◽  
Private And Public ◽  
The Government ◽  
The Masses

In theory, it was conforming to the accepted standard the open economies grow faster than the closed economies, and respectable economic development level could be achieved. This paper investigates the dynamic impact of trade openness on the economic growth in Nigerian economy between 1980 - 2016 empirically. Secondary data were sourced, from the 2016 Central Bank of Nigeria Statistical Bulletin’. The tests of diagnostic conducted are: cointegration test, unit root test and error correction model. The analysis result revealed the trade openness was found to have negatively impacted on the economic growth in both the short run and long run. Based on study findings, it is recommended that since the imports of the country are more than its export; the government needs to have the present efforts to sustain the diversification of the economy to achieve economic growth led by exports. Furthermore, the collaborative effort of government with private sectors should encourage the export substitute in the nation to discourage importation and promote export of primary commodities especially the ones that have absolute advantages to the nation. Lastly, the study also recommended that the government of the country should sustain the policy of Treasury Single Account (T.S.A) so as that the loopholes will be blocked in the private and public sectors of the nation, and also to make sure there is equity in the utilization of the revenue generated internally for the masses to benefit.

scholarly journals Does Monetary Policy Induce Economic Growth? An Empirical Evaluation of the Nigerian Economy

2019 ◽  
Vol 2 (4) ◽  
pp. 331
Author(s):  
Anthony Ilegbinosa Imoisi
Keyword(s):  
Economic Growth ◽  
Empirical Evaluation ◽  
Unit Root Test ◽  
Secondary Data ◽  
National Bureau ◽  
Monetary Policies ◽  
Vector Error Correction ◽  
Long Run ◽  
Short Run ◽  
The Government

Monetary and Fiscal policies are instruments which the government of any nation can employ to effectively achieve the desired growth of their respective economies. This study investigates the extent to which monetary policies can promote economic growth in Nigeria from 1980-2017. Secondary data were used from the Statistical Bulletin of the apex bank in Nigeria (CBN) and National Bureau of Statistics. Unit root test, Johansen co-integration and the vector error correction model (VECM) were employed in analyzing the data collected for this study. The result showed that approximately 62% of GDP is explained by variables in the model while 38% is accounted for and explained by other variables not included in the model but are captured by the error term. In addition, monetary policies did not have a significant impact on Nigeria’s economic growth in the short run, but significantly affected the country’s growth in the long run.

Fiscal Deficit And Economic Growth, Nigeria Experience

2015 ◽  
Vol 3 (11) ◽  
pp. 6-15
Author(s):  
Ogunsakin Sanya ◽  
Lawal N Abiola
Keyword(s):  
Economic Growth ◽  
Capital Accumulation ◽  
Capital Expenditure ◽  
Unit Root Test ◽  
Secondary Data ◽  
Annual Reports ◽  
Fiscal Deficit ◽  
Distributed Lag ◽  
Long Run ◽  
Integration Test

This study examines impact of fiscal deficit on the growth of Nigerian economy using co-integration and error correction. Secondary data were gathered from various sources such as; the Central Bank of Nigeria statistical bulletin, economic and financial review monthly and annual reports and statement of accounts for various years. The time series property of the data employed, are first to be investigated. This is then followed by testing for co-integrated variables. From the unit root test, the results clearly indicate that the variables are integrated of the same order at first difference. Also, from the multivariate co-integration test, within the Auto-Regressive Distributed Lag (ARDL) the results indicate that there are, at most, two co-integrating vectors. This implies that there exists a stable long-run relationship between economic growth and budgeting components. From the study, it was discovered that deficit budget is one of the indicators of macroeconomic instability and significantly discourage human capital accumulation. However, recommendations are made based on the findings among which are that government should set its priorities right, be more committed to budget implementation and to pay more attention to capital expenditure geared towards growth.

scholarly journals A causal relationship between derivatives trading, capital market development and economic growth: Evidence from South Africa

2014 ◽  
Vol 11 (2) ◽  
pp. 688-696 ◽  
Author(s):  
Godfrey Marozva
Keyword(s):  
Economic Growth ◽  
Granger Causality ◽  
Capital Markets ◽  
Capital Market ◽  
Stock Exchange ◽  
Market Development ◽  
Management Tools ◽  
Distributed Lag ◽  
Long Run ◽  
Short Run

This article is based on empirical research on the relationship between derivatives and capital market development and also between derivatives and economic growth on the Johannesburg Stock Exchange (JSE) for the period between 1994 and 2012. The study employed the Autoregressive Distributed Lag (ARDL)-bound testing approach and the Granger causality tests to examine the linkage between capital market development and derivatives, and the nexus between derivatives and economic growth to capture the short-run and long-run dynamics. The results show that there is a significant relationship between derivatives and capital markets development. Further tests indicated that there is a unidirectional Granger causality running from capital market development to derivatives both in the short run and long run, implying that derivatives do not Granger cause capital market development. Results also revealed that there is no direct linkage between derivatives and economic growth. Based on the research it is recommended that further research should be conducted to investigate how derivatives enhance capital market development through augmentation of liquidity and efficiency, leverage, and reduction of transaction costs through the role of derivatives as risk management tools in capital markets.

scholarly journals Capital market and economic growth in Malaysia: the role of ṣukūk and other sub-components

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Yan-Ling Tan ◽  
Roslina Mohamad Shafi
Keyword(s):  
Economic Growth ◽  
Stock Market ◽  
Capital Market ◽  
Market Liquidity ◽  
Content Type ◽  
Stock Market Development ◽  
Distributed Lag ◽  
Long Run ◽  
The Capital Market

Purpose The purpose of this paper is to explore the effects of the capital market on economic growth by considering the role of ṣukūk (Islamic investment certificates) and other capital market sub-components in Malaysia between 1998 and 2018. Design/methodology/approach The empirical investigation is based on the autoregressive distributed lag (ARDL) cointegration bounds test. Findings The results reveal the prevalence of a long-run equilibrium relationship between capital market variables and economic growth. As expected, bond market components (ṣukūk and conventional bonds) have a positive, albeit insignificant influence on economic growth. In contrast, in the long-term, stock market development – regardless of the indicator used on economic growth – is shown to have a significant and positive effect. The study suggests that stock market sub-components affect Malaysia’s economic growth the most. Research limitations/implications The primary limitation of this study is that only corporate ṣukūk were considered, while government ṣukūk were excluded from the estimation due to a lack of requisite information, resources and data. Practical implications A strategic framework should be established, especially in pricing efficiencies. Furthermore, there is a need to create more awareness on the benefits of ṣukūk investment among conventional bond investors, including retail investors. Thus, there will be more players in the ṣukūk market, and this will help to improve market liquidity. Originality/value Apart from conventional capital market sub-components, this study takes into account ṣukūk as a sub-component in the capital market on economic growth using the ARDL framework. Also, this study particularly concentrates on the world’s largest ṣukūk issuer, Malaysia, rather than focusing on other ṣukūk-issuing countries.

scholarly journals Capital Market Development and Economic Growth in Nigeria

2018 ◽  
Vol 4 (10) ◽  
pp. 99 ◽  
Author(s):  
Ayodeji AJIBOLA
Keyword(s):  
Economic Growth ◽  
Capital Market ◽  
Unit Root Test ◽  
Policy Framework ◽  
Market Development ◽  
Regression Result ◽  
Supply Shocks ◽  
Long Run ◽  
Integration Test ◽  
Net Export

The paper examined the effect of a well developed capital market on economic growth in Nigeria. We developed a model that is able to investigate how capital market development affects business cycle volatilities, and in the long run economic growth through the use of multi-variable regression analysis. Unit root test was conducted and all our estimating variables were stationary at first difference except the Christiano-Fitzgerald filter which shows that our model interpretation would not be spurious and a true representation of the relationships that exists between the explained and explanatory variables. Error Correction Model was introduced in our estimation in order to have a parsimonious model. Insignificant variables such as Net Export were removed from our model. This can be understood from the reasoning that Nigeria remains a mono-cultural economy (oil dependent) and is seen by the export shocks being negative and significant from our earlier regression result. From our result, all our variables (market capitalization, gross fixed capital, and structural activity) all have a positive but fairly insignificant impact on economic growth. The volatility measure on the other hand had a negative but highly significant impact on economic growth which supports the endogenous growth model that developing countries (Nigeria inclusive) are highly susceptible to macroeconomic shocks such as money supply shocks, export supply shocks, productivity shocks, etc). In addition, Engle-Granger co integration test was done and showed the existence of a long run relationship between capital market development and economic growth in Nigeria. We recommend adopting a policy framework that address the weak linkages between net export and the rest of the Nigerian economy by diversification, creating conducive environment that allows domestic investors to invest in the capital market and removing all impediments to local businesses. Finally, government securities should be channelled to more productive sectors to complement those in the private sector.

Stock Market Development And Economic Growth in Nigeria

1998 ◽  
Vol 2 (1) ◽  
pp. 33-38 ◽  
Author(s):  
John C. Anyanwu
Keyword(s):  
Economic Growth ◽  
Risk Management ◽  
Stock Market ◽  
Conceptual Framework ◽  
Corporate Control ◽  
Market Development ◽  
Political Environment ◽  
Stock Market Development ◽  
Long Run

Is the stock market development important for economic growth in Nigeria? One line of research argues that it is not; another line stresses the importance of stock market development in allocating capital, acquisition of information about firms, easing risk management, mobilization of savings, and exerting corporate control. Indeed, some theories provide a conceptual framework for the belief that larger, more efficient stock markets boost economic growth. This article examines whether there is a strong empirical association between Nigerian stock market development and long-run economic growth. Our empirical results suggest that the Nigerian stock market development is positively and strongly associated with long-term economic growth. This implies that Nigerian policymakers should make concerted efforts at removing obstacles to stock market development while creating and sustaining an enabling macroeconomic and political environment for the market’s development.

scholarly journals The impact of education tax and investment in human capital on economic growth in Nigeria

2020 ◽  
Vol 3 (2) ◽  
pp. 77-86
Author(s):  
Abubakar Aminu ◽  
Keyword(s):  
Economic Growth ◽  
Human Capital ◽  
Tertiary Education ◽  
Distributed Lag ◽  
Distributed Lag Model ◽  
Long Run ◽  
Lag Model ◽  
The Government ◽  
Capital Development ◽  
The Impact

This paper investigated the impact of education tax and investment in human capital on economic growth in Nigeria utilizing the Non-Linear Autoregressive Distributed Lag Model of cointegration covering the period of 25 years from 1995 to 2019. The findings reveal that education tax and investment in human capital have positive and significant effect on the growth of the Nigerian economy over the sampled period. The paper recommends that in order to boost the economy, Nigeria would need to, among other policy frameworks, provide a suitable environment for ensuring macro-economic stability through effective utilization of income from education tax that will encourage increased investment in human capital in the public sector. In addition to income from education tax, for effective and speedy economic growth and development in Nigeria, the government, beneficiaries (students/parents), employers of labor and other stakeholders in the society should share the responsibility for financing primary, secondary and tertiary education, so as to provide a solid foundation for human capital development. However, as revealed in this paper, the contribution of education tax and investment in human capital is most likely to be realized over a long-run period than in the short term. Keywords: Education Tax; Investment; Human capital; Economic growth

Impact of Trade Openness on Nigerian Economic Growth: An Empirical Investigation, 1970–2011

2020 ◽  
Vol 55 (2) ◽  
pp. 239-247 ◽  
Author(s):  
Gerald C. Nwadike ◽  
Ani Kelechi Johnmary ◽  
Chukwuma Samuel Alamba
Keyword(s):  
Economic Growth ◽  
Trade Openness ◽  
Unit Root Test ◽  
Total Import ◽  
Private Sector Investment ◽  
Ex Post ◽  
Long Run ◽  
Integration Test ◽  
The Government ◽  
The Impact

Geopolitical territories have often engaged in one form of trade or another with their neighbours. That is because no nation in the world can survive without one form of trade with other sovereign states. This study examines the nature of trade openness and economic growth in Nigeria from 1970–2011. The emphasis of this empirical study is to ascertain the impact of trade openness on Nigeria’s economic growth. Causal comparative or ex-post facto research design was adopted in the study. Econometric time series analyses like ADF unit root test, co-integration test and the ordinary least squared (OLS) were employed in the study. The result obtained was used to test the hypotheses, and it was revealed that (i) Trade Openness has positive significant impact on Nigeria’s economic growth; while (ii) Gross Domestic Product (GDP) responds to the shock of Trade Openness value as a proxy of total import and total export divided by GDP as well as change in Exchange Rate (DEXR) within Nigeria’s economy during the period of study. Thus, the co-integration results indicate that there exists long-run relationship among the variables used; hence; the researchers then recommended that there is urgent need for the government to create enabling environment for good trade policy that would attract both foreign and domestic private sector investment in the country. JEL Codes: F13, B27

LPG consumption and economic growth, 1975-2016: evidence from Cameroon

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Jean Gaston Tamba
Keyword(s):  
Economic Growth ◽  
Causal Relationship ◽  
Liquefied Petroleum Gas ◽  
Content Type ◽  
Distributed Lag ◽  
Long Run ◽  
Short Run ◽  
Gas Consumption ◽  
The Government ◽  
Energy Efficiency Policies

Purpose This paper aims to examine the causal relationship between liquefied petroleum gas consumption and economic growth in Cameroon over the period from 1975 to 2016. Design/methodology/approach The methodology of this study is based on the unit root, cointegration and causality tests. Cointegration is performed with both Johansen and autoregressive distributed lag bounds approach, while causality is done with the Granger test based on the error correction model (ECM) and Toda-Yamamoto procedure. Findings The cointegration methods confirm the existence of a level relationship, whereas the causal tests of the ECM reveal the existence of a short-run unidirectional causal relationship ranging from liquefied petroleum gas (LPG) consumption to economic growth and a bidirectional causal relationship between long-term and high-causality variables. With the Toda-Yamamoto procedure, unidirectional causality is found to run from economic growth to liquefied petroleum gas consumption. Research limitations/implications These findings imply that an increase in liquefied petroleum gas consumption leads to an increase in economic growth. As a result, supporting energy efficiency policies that aim to reduce liquefied petroleum gas consumption is not an option for Cameroon. Given that LPG consumption shares are still low in Cameroon, the government ought, thus, to increase LPG subsidization, vulgarize and favor policies aimed at encouraging LPG consumption to increase LPG deposits nationwide. This would help increase LPG consumption and consequently could increase economic growth in Cameroon. Originality/value LPG is a fossil fuel and is the less GHG emitter and it is considered as a modern source of energy for cooking in Cameroon households. It scarcity calls on energy policymakers to question the influence LPG consumption could have on economic growth in the short- and long-run. Thus, this paper could contribute to solving the issue of deforestation in Cameroon, especially in the Sahel zone; through the substitution of firewood consumption by LPG consumption in households.

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